TechM should improve margins, says Anand Mahindra

MUMBAI: Tech Mahindra chairman Anand Mahindra said on Wednesday that the company had to improve profitability, after shareholders pointed out its huge margins gap with larger peer TCS.

“You talked about TCS having a higher margin, I am glad you said it loudly, it’s a good thing for him (CP Gurnani) to hear,” Mahindra told shareholders at the annual general meeting.

Gurnani is CEO at Tech Mahindra. Margins for TCS, the country’s largest software exporter, stood at 24.2% in the June quarter, the highest in the IT services industry globally. In contrast, Tech Mahindra reported margins of 15.2%.


“I would be very happy if we can move our margins up, I cannot argue with you. I’m sure the board will drive the management to excel every year,” Mahindra said.

Analysts said improvement in margins and revenue performance were key concerns for the IT services provider. The company has seen attrition spike to over 20%, which raised queries from shareholders on its efforts to retain talent.

Mahindra said the IT service provider was doing a good job in a volatile period, but would try to improve upon the metric.

Rivals such as Infosys and Wipro have seen higher attrition as global firms — which are expanding their captive centres in India — poach trained engineers in digital skills. As the industry faces a talent crunch in newer digital skills, Indian IT services firms have become a hunting ground for recruiters.

Mahindra also said that group companies collaborate with each other and crosssell services to clients across the world.

“If Tech Mahindra is dealing with some overseas companies and that company could be a client for Tech Mahindra’ services, that’s where we do cross selling and try and find inter linkages between all our group companies.” The company has filed for 111 patents, of which 52 have been granted so far, he said.